Artist Ai Weiwei said he would refuse to pay the remainder of a $2.4 million fine for tax evasion after a Beijing court rejected his appeal on Thursday, setting the stage for another possible showdown between the media-savvy dissident and Chinese authorities.

Mr. Ai had previously deposited $1.33 million in a government-controlled account as a pre-condition to being allowed to appeal the charges. The artist said in an interview that he assumed the government would automatically take that money, but that he did not plan to hand over any more cash.

“We’re not going to pay the fine because we don’t recognize the charge,” he said. “And I think they’re probably too embarrassed to come and ask for it.”

Mr. Ai, who was detained for 81-days without charge last year amid a broad crackdown on dissent, sued the Beijing tax bureau in April, saying the city’s tax authorities had acted illegally in pursuing claims that he evaded taxes through his design company, Beijing Fake Cultural Development Ltd. Beijing’s Chaoyang District Court rejected the suit after finding the tax bureau had acted properly.

Unlike with previous hearings, which Mr. Ai was prevented from attending, the artist said he was allowed into the courtroom to hear Thursday’s ruling. He later posted a photo to his Twitter feed of a stamped notice that said the appeal had been rejected because it “lacked relevant facts and legal bases.”

Ai Weiwei

The image of a court notice posted to Ai Weiwei’s Twitter account on September 27, 2012. The notice says the court had decided not accept Mr. Ai’s appeal in his case against Beijing tax authorities because it “lacked facts and legal bases.”

“I told them the whole thing was a disgrace,” the artist said, referring to the officials at the Beijing No. 2 Intermediate People’s Court who handed down ruling. “No one looked at me. They just bowed their heads. I think they felt helpless. They didn’t want to do it.”

Repeated calls to the office inside the court that was responsible for the case rang unanswered Thursday.

In promising not to pay the fine, Mr. Ai continues a public battle with authorities that has won him acclaim from fans in China and abroad, including around 30,000 supporters who donated a total of $1.37 million earlier this year so that he pay the bond that allowed him to press ahead with his legal challenge.

But the fight has also resulted in restrictions on Mr. Ai’s freedom. His home in northern Beijing is surrounded by more than a dozen surveillance cameras and he says the government has yet to give him back his passport, confiscated when he was detained at the Beijing airport in April 2011.

Mr. Ai said on Thursday that he didn’t know if or when authorities would return his passport, which he said was supposed to have been handed back following a one-year probation period that ended on June 21.

“From the beginning, when they first grabbed me at the airport, they violated the law,” he said, adding that he had dismissed warnings from friends that refusing to pay the remainder of the fine gave police an excuse to arrest him. “I’m not afraid. They can arrest me any time they want to. They don’t need an excuse,” he said.

The artist accused the court of ignoring regulations by failing to notify his lawyers about Thursday’s decision in advance. Instead, he said, the court place a call to his wife, Lu Qing, earlier in the week. He also said the court violated the law by issuing a verdict on the appeal without holding a formal hearing.

Mr. Ai said that he never expected to get a fair trial and that his purpose in filing the suit was to expose the workings of the Chinese legal system. “We tried to go step-by-step and show the public how this process works,” he said, arguing that the way his case was handled was a “big loss of face” for the court.

The artist said plans are underway to repay the money donated to him by supporters, a process he estimates will take two to three months.

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